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Old 1st December 2012, 04:04 PM   #41
RandFan
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Originally Posted by DGM View Post
So you really have no point to discuss.
My point is that there is a lack of correlation between increased wealth at the top of the economic ladder and the bottom of said ladder. I've stated my point frankly. I've stated that I wanted to discuss it. So, you are being obtuse?

Quote:
You're just stating fact.
I'm stating that there is a lack of correlation between increased wealth at the upper tiers of society with increased wealth at the lower tiers of society. I'm stating that increased profits don't translate into increased wealth for those on the lower rungs of the ladder.

Quote:
What do you want to talk about?
I'd like to discuss the lack of a correlation between increased corporate profits and increased wealth at the lower rungs of society.

RandFan: Let's discuss the disparity between Supply Side Economics and the real world:
DGM: Okay, what do you want to discuss?
RandFan: The disparity between the hypothesis of Supply Side Economics and the real world.
DGM: Okay, but what do yo want to discuss?
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Old 1st December 2012, 04:07 PM   #42
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Originally Posted by DGM View Post
Why are you posting this in current events? I'm asking for it to be moved.
I posted it in social issues because I believed that it was a social issue. I said in a previous post that I perhaps erred. Why did you bother to ask me this question as again, it's OT? Next time just report it.
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Old 1st December 2012, 04:10 PM   #43
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Quote:
  • I've answered your questions.
With your credentials, you should understand that total profits are meaningless without considering profit margins.

Since you tossed it out there as if it were significant, it is up to you to show that it is..

Quote:
  • You have ignored mine.
I don't claim any informed knowledge with regard to the questions you asked me.
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Old 1st December 2012, 04:13 PM   #44
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Originally Posted by Jorghnassen View Post
Thank you. Very informative.
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Old 1st December 2012, 04:16 PM   #45
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Originally Posted by Skeptical Greg View Post
With your credentials, you should understand that total profits are meaningless without considering profit margins.
No. Profit margins would provide us a better picture of the overall health of these businesses but it doesn't obviate the fact that we are talking about profits.

Quote:
I don't claim any informed knowledge with regard to the questions you asked me.
Fair enough but it does raise the question as to why you would make the categorical claim that you did above. If you honestly don't know the answer to those questions then perhaps you ought not make those kinds of absolute statements.
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Old 1st December 2012, 04:16 PM   #46
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Originally Posted by RandFan View Post
I posted it in social issues because I believed that it was a social issue. I said in a previous post that I perhaps erred. Why did you bother to ask me this question as again, it's OT? Next time just report it.
I did.
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Old 1st December 2012, 04:21 PM   #47
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Originally Posted by RandFan View Post
Corporate Profits After Tax (CP)

http://img163.imageshack.us/img163/1...ateprofits.png

Waiting for the trickle down to start. Any day now that money has to start making it's way down to the rest of us. That is how it works right?
You might want to analyze why corporate profits are so high before deciding that it is a bad thing.

BTW your chart implies that corporate profits were negligible prior to 1970. You should find numbers that have been adjusted for inflation.
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Old 1st December 2012, 04:24 PM   #48
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Quote:
I'd like to discuss the lack of a correlation between increased corporate profits and increased wealth at the lower rungs of society.


Exactly what is the lack of correlation you refer to ?

The lack, seems to be your failure to provide it.
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Old 1st December 2012, 04:30 PM   #49
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Originally Posted by Skeptical Greg View Post
http://i1130.photobucket.com/albums/.../fredgraph.png

Exactly what is the lack of correlation you refer to ?
Your chart does not break out the different tiers of the economy (see below).

Quote:
The lack, seems to be your failure to provide it.
But this is dishonest. I DID provide it. But I'll provide it again. See the problem with your chart above is that it doesn't tell us how increased wealth trickled down to the lower tiers. Yes, the rich got richer which makes it look like everyone got richer. But everyone didn't get richer.



If you were to combine all of these categories it would look like everyone got richer equally when that isn't the case, right?
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Old 1st December 2012, 04:35 PM   #50
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Originally Posted by Skeptical Greg View Post
http://i1130.photobucket.com/albums/.../fredgraph.png

Exactly what is the lack of correlation you refer to ?

The lack, seems to be your failure to provide it.
BTW: Let's assume that your chart actually demonstrated conclusively that there was such a correlation. What's wrong with that? What the hell is wrong with asking a question and getting an answer? I wouldn't mind to be shown wrong. What on earth do you suppose I'm doing here? I want to know what the truth is. That's it. I'm not here to win an argument. I'm not a partisan. So I've no idea what you are on about in any event. If you have some data please provide it. Please contribute? I've no problem with being shown wrong.
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Old 1st December 2012, 04:39 PM   #51
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Originally Posted by StuartSymington View Post


Personal and corporate tax rates need to be reset to what they were under
President Eisenhower, the last fiscal conservative we had in the USA.
The $32 Trillion that has been hidden in illegal offshore accounts since
1971 (the end of the gold standard) needs to be repatriated to the
USA.

What they are currently arguing about on Capitol Hill is small change.

It may take a revolution to fix what is wrong in the USA today.
I'd like to see tax rates go back to where they were under Clinton first. Tax deductions were different under Eisenhower. The effective rates were certainly not that high.
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Old 1st December 2012, 04:43 PM   #52
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Quote:
Your chart does not break out the different tiers of the economy (see below).
Your chart on corporate profits doesn't either..

Quote:
If you were to combine all of these categories it would look like everyone got richer equally when that isn't the case, right?
And you would have us believe all corporations are making equally high profits..
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Old 1st December 2012, 04:52 PM   #53
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Originally Posted by Skeptical Greg View Post
Your chart on corporate profits doesn't either.
That's a nonsensical statement. My chart also doesn't do dishes.

Quote:
And you would have us believe all corporations are making equally high profits..
Let me stipulate that they don't. I only note that as profits and wealth rise it does not translate into rising wealth for the lower tiers of society.

I'm not claiming that I've demonstrated anything. I'm simply noting a lack of correlation between rising wealth and profits among the wealthy with that of the lower classes. I've already stipulated that I could be missing a key variable or something else. So, let's focus on what we do know. Fair enough? We know that corporate profits are at record highs. We know that wealth is at record highs. We know that those among the lower tiers are having very difficult times. Agreed?

Now, perhaps in a year the lower classes will see significant increases to their wealth as a result of these high profits. That's possible, right? Okay, so, my point, I don't see any evidence for supply side economics. I see no evidence to even suppose that supply side economics is remotely plausible. So far the data is lacking.
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Old 1st December 2012, 04:58 PM   #54
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Rand, you have two separate topics going on for which you provided illustrations.

One was profits

The other wealth broken out by the "wealthiest" scheme.

I will not waste time answering your smart remark about hypothesis, since I was asking you if you had data that was a bit less macro than what you offered up.

I ask for a simple reason. If profits are up and the sectors that are improving tend to be labor intensive, you'll have a different influence on labor than if the sectors are machine or capital intensive.

Since you didn't offer up anything beyond a very broad brush, I guess you don't want to take it any further.

Cheers.
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Old 1st December 2012, 05:01 PM   #55
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Originally Posted by Darth Rotor View Post
Since you didn't offer up anything beyond a very broad brush, I guess you don't want to take it any further.

Cheers.
I'm more than happy to consider any data you have Darth. Seeing that you don't offer any and given that I've only stated that I have no data demonstrating a correlation and given that you won't provide any, I guess you don't have anything to offer.

Cheers indeed.
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Old 1st December 2012, 05:19 PM   #56
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Originally Posted by Darth Rotor View Post
Rand, you have two separate topics going on for which you provided illustrations.

One was profits

The other wealth broken out by the "wealthiest" scheme.

I will not waste time answering your smart remark about hypothesis, since I was asking you if you had data that was a bit less macro than what you offered up.

I ask for a simple reason. If profits are up and the sectors that are improving tend to be labor intensive, you'll have a different influence on labor than if the sectors are machine or capital intensive.

Since you didn't offer up anything beyond a very broad brush, I guess you don't want to take it any further.

Cheers.
http://www.census.gov/compendia/stat...es/12s0793.pdf

Is not a full answer or over Rand's timespan, but it is a beginning.
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Old 1st December 2012, 05:25 PM   #57
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Originally Posted by AlBell View Post
http://www.census.gov/compendia/stat...es/12s0793.pdf

Is not a full answer or over Rand's timespan, but it is a beginning.
Please to provide any data over any time span you wish. From what I've looked at there is very little correlation between the rising wealth of the rich and poor. Obviously when the economy is good both are likely to do well and when things are poor both are likely to do poor. But I can show you a correlation between rising rising oil costs and rising fuel prices and the relationship is clear even if there is at times latency between the two, the overall pattern is clear. If supply side economics had any basis in reality one should find a correlation. And, BTW, it might exist I've just not seen it.
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Old 1st December 2012, 05:32 PM   #58
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Originally Posted by DavidJames View Post
Good luck with that.

Like I said in another thread. There don't seem to be any intellectually honest Republicans/conservatives left at JREF any more.
There's one, it's RandFan.
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Old 1st December 2012, 05:37 PM   #59
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Originally Posted by Skeptic Ginger View Post
There's one, it's RandFan.
Thanks. Though I think of myself as independent. Funny that I was called an Obama fanboy in a PM because of this thread. I was seriously considering Huntstman. Had he won the nomination I'm not sure who I would have voted for. I even considered Romney for a little while. If he was truly the moderate he was in Massachusetts (and if he had principles) I would have had a more difficult time making a choice.
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Old 1st December 2012, 06:11 PM   #60
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Originally Posted by RandFan View Post
I only note that as profits and wealth rise it does not translate into rising wealth for the lower tiers of society.
If your only point is that is that there is no "trickle down" effect then we can stipulate that this is the case and close down this thread.

However, I suspect that you are trying to say more than that . . .
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Old 1st December 2012, 06:11 PM   #61
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Originally Posted by RandFan View Post
One thing this graph does clearly show is a correlation of earnings and risk - which is something that I would expect from a (fair) functioning capitalist system. The top x% gain disproportionately but they also lose disproportionately - your curves make that very clear. The lower curves are fairly flat and predictable (low risk), the higher curves are ever more extreme in variation (higher risk). Behind the scenes of these curves are people that have made and lost thousands / millions / billions, the fact that it doesn't smooth out tells a tale with respect to the pattern of risk as it moves up the reward chain.
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Old 1st December 2012, 06:16 PM   #62
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Originally Posted by RandFan View Post
Probably.

Could you point me to the part of the hypothesis of supply side economics that stipulates that it only works for some industries?

Again, let me keep this simple, I don't think there is any evidence of a correlation between increased wealth at the top of the economic ladder with increased wealth at the bottom. Sure the hypothesis (supply side economics) could be viable and I could be ignoring some key variable. I honestly don't know. I know it's one more example of there being no correlation.
You are conflating supply side economics with trickle down economics, they are not the same thing, they are often conflated though because Reagan put in such a large tax break for high income earners.

Supply side economics has never been accepted as a serious school of thought in the field of economics. It takes an idea that pretty much everyone agrees with, that cutting taxes can spur growth by stimulating additional consumption, and turns it on its head by arguing that it can increase supply first and the additional competition will lower prices and increase consumption. This is of course nonsense, supply reacts to changing demand, not the other way around. Also, various factors in different markets affect the ability of competition to enter them. Simply giving them money will not make a difference in some cases and it won't be attempted at all if they don't expect to see necessary consumer demand. Tax cuts can encourage growth but it happens in a different way than supply side economics predicts.

Lower business taxes as well as capital gains taxes can shift money into growing enterprises as well as help keep a country competitive in terms of foreign countries wishing to take their businesses away. But, while this can help encourage growth, there still has to be expected consumer demand.

As for corporate profits right now, companies have had nowhere to expand to but have still been investing in increasing the productivity of their current operations so they are becoming more profitable with nowhere to spend their money. In other words, if they were spending their money on expansion their profits would be lower. The good news is that a lot of firms are saving their cash rather than paying it out to their owners in the form of dividends which means they are planning for significant expansion in the future.

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Old 1st December 2012, 06:17 PM   #63
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Originally Posted by hodgy View Post
One thing this graph does clearly show is a correlation of earnings and risk - which is something that I would expect from a (fair) functioning capitalist system. The top x% gain disproportionately but they also lose disproportionately - your curves make that very clear. The lower curves are fairly flat and predictable (low risk), the higher curves are ever more extreme in variation (higher risk). Behind the scenes of these curves are people that have made and lost thousands / millions / billions, the fact that it doesn't smooth out tells a tale with respect to the pattern of risk as it moves up the reward chain.
Thanks. I think greater risk deserves greater reward. I'm a Rand fan.
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Old 1st December 2012, 06:24 PM   #64
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Originally Posted by RandFan View Post
Corporate Profits After Tax (CP)

http://img163.imageshack.us/img163/1...ateprofits.png

Waiting for the trickle down to start. Any day now that money has to start making it's way down to the rest of us. That is how it works right?
These seem to be presented as absolute figures (i.e. not adjusted for inflation etc...) - are they?
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Old 1st December 2012, 06:38 PM   #65
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Originally Posted by hodgy View Post
These seem to be presented as absolute figures (i.e. not adjusted for inflation etc...) - are they?
In the case of wealth it's a ratio to compare the tiers. As for corporate profits, assuming that it is not adjusted: According to the graph corporate profits were almost 200 billion in 1980. Adjusted for inflation using the Inflation Calculator that would be 500 billion. At the height it was 1.4 trillion.
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Old 1st December 2012, 07:05 PM   #66
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Originally Posted by RandFan;8811716[url
http://imageshack.us/a/img831/866/incomegap.jpg[/url]

If you were to combine all of these categories it would look like everyone got richer equally when that isn't the case, right?

There's some historical income data at the Census Bureau web site.

Out of curiosity, I downloaded the data, converted the income figures (in constant dollars) so that the values for each quintile and top 5% for each year were relative to their starting value, and graphed the results. It was interesting. From 1947 to about 1979 income growth across the quintiles and top 5% was almost identical. That is, every quintile and the top 5% had about twice as much income in 1979 relative to what it had in 1947. But after 1979 something happens—there is a marked divergence in income growth in the quintiles and top 5%. While the lowest quintile, for example, saw very little income growth, the top quintile and top 5% saw considerable growth.

This raises the obvious questions: What was going on from 1947 to about 1979 which resulted in nearly uniform rates of income growth across the quintiles and top 5%? And what happened after about 1979 which resulted in disparate growth? Why were things nearly even for about thirty years then uneven for the following thirty years?
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Old 1st December 2012, 07:10 PM   #67
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Originally Posted by Corsair 115 View Post
There's some historical income data at the Census Bureau web site.

Out of curiosity, I downloaded the data, converted the income figures (in constant dollars) so that the values for each quintile and top 5% for each year were relative to their starting value, and graphed the results. It was interesting. From 1947 to about 1979 income growth across the quintiles and top 5% was almost identical. That is, every quintile and the top 5% had about twice as much income in 1979 relative to what it had in 1947. But after 1979 something happens—there is a marked divergence in income growth in the quintiles and top 5%. While the lowest quintile, for example, saw very little income growth, the top quintile and top 5% saw considerable growth.

This raises the obvious questions: What was going on from 1947 to about 1979 which resulted in nearly uniform rates of income growth across the quintiles and top 5%? And what happened after about 1979 which resulted in disparate growth? Why were things nearly even for about thirty years then uneven for the following thirty years?
I think the conventional wisdom is that it has something to do with Reagan.
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Ego, ain't it a bitch?

It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion. --Adam Smith
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Old 1st December 2012, 07:32 PM   #68
Jorghnassen
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Originally Posted by RandFan View Post
Thank you. Very informative.
You're welcome. Here in Canada, this situation is annoying even the very pro-business, Conservative government.

This "uncertainty means not a good time to invest/spend" appears to be an excuse/self-fulfilling prophecy of the corporate/financial world.
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Old 1st December 2012, 08:19 PM   #69
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Bwaaaaaaaaaaaaaaahahahahaha!

Silly humans!
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Old 1st December 2012, 08:32 PM   #70
RandFan
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Originally Posted by balrog666 View Post
Bwaaaaaaaaaaaaaaahahahahaha!

Silly humans!
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Ego, ain't it a bitch?

It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion. --Adam Smith
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Old 1st December 2012, 09:58 PM   #71
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Originally Posted by RandFan View Post
Corporate Profits After Tax (CP)

http://img163.imageshack.us/img163/1...ateprofits.png

Waiting for the trickle down to start. Any day now that money has to start making it's way down to the rest of us. That is how it works right?
Never in the history of the world has life been better... it actually seems to be going up like that line in the chart.
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Old 1st December 2012, 10:01 PM   #72
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Originally Posted by RandFan View Post
What should it look like?
I don't know... it should look something like the ability for you or I to spend 10 hours a day on an internet message board without falling over dead.
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Old 1st December 2012, 10:10 PM   #73
stevea
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Originally Posted by RandFan View Post
Corporate Profits After Tax (CP)

http://img163.imageshack.us/img163/1...ateprofits.png

Waiting for the trickle down to start. Any day now that money has to start making it's way down to the rest of us. That is how it works right?
No. Wrong. that is not how it works at all.

"Trickle Down" is a pejorative and politically biased description of the partially evidenced idea ...
Quote:
An economic theory that the support of businesses that allows them to flourish will eventually benefit middle- and lower-income people,...
The first massive flub in this OP is that "corporate profits after tax" are not 'support of business' in any sense. I believe the origin of the term was during Reagan tax cuts, and in fact the cuts did precede dramatic improvements in GDP growth which generally benefited the populace.

The author is apparently ignorant of corporate profit calculation and fails to recognize that many businesses have a considerable ability to choose precisely when profits are realized or example realizing profits in a low tax year before higher taxes rates are imposed.

Further profits are not a direct indication of business health. For examples businesses may be profitable as they successfully downsize into oblivious.

Yes corporate profits are very high, and despite your claims LARGE corporate hiring has advanced at a remarkably pace, at least into 2011 - the last figures I've seen. But it is not enough to compensate for attrition & downsizing and lack of new hiring for small corps and other small biz entities. These mid- small companies have very poor access to capital at the moment, and of course then there are the market problems and market & regulatory uncertainties.

Alan Watts had some quote about a paradox always representing the wrong way of looking at a problem; a bad premise. Maybe this will help ,
http://www.economist.com/node/21559365

Quote:
Why have profits been so high, despite the fragility of the economy? American firms were very quick to sack workers after the crisis started.[s: and otherwise reduce costs] But there is also a longer-term explanation, based on the weakened power of labour after the entry of countries like China into the global employment market. Companies have been able to move production offshore and to resist demands for wage increases from workers in their domestic market.

But even if capital is lording it over labour, a second mechanism ought to bring corporate profits down. A high return on capital should encourage a wave of investment. The resulting expansion in capacity should increase competition and reduce returns. But that has yet to happen: companies are still hoarding cash.

There are three potential explanations for this cash mountain. The first is that executives are worried about excessive regulation. American bosses in particular may be waiting for a possible change of administration after the presidential election in November.

The second is that firms are reluctant to invest in the face of weak demand. Domestic consumers have been under pressure from austerity and higher commodity prices; the euro-zone crisis and a slowdown in developing economies is weighing on export prospects. Companies may have milked all they can from productivity improvements. The irony here is that a high share of GDP for profits automatically results in a low share for wages and thus may eventually be self-limiting—a positively Marxist outcome.

The third explanation for cash hoarding is the most intriguing. Andrew Smithers of Smithers & Co, a consultancy, suggests incentives may be to blame. Managers are motivated by share options and share prices are driven by changes in earnings per share. Spending cash on share buy-backs boosts earnings per share immediately, whereas a capital-investment programme may actually reduce earnings in the short term.

The OP is a Complete fail! It conflates several unrelated economic ideas adds a pinch of political spin terminology and creates a briar patch of illogic and political responses.
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Old 1st December 2012, 10:19 PM   #74
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Originally Posted by RandFan View Post
But this is dishonest. I DID provide it. But I'll provide it again. See the problem with your chart above is that it doesn't tell us how increased wealth trickled down to the lower tiers. Yes, the rich got richer which makes it look like everyone got richer. But everyone didn't get richer.
According to the chart you posted they did.
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Old 1st December 2012, 10:36 PM   #75
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Originally Posted by RandFan View Post
So, let's focus on what we do know. Fair enough? We know that corporate profits are at record highs. We know that wealth is at record highs. We know that those among the lower tiers are having very difficult times. Agreed?
Difficult times maybe..... but it has NEVER been less difficult. That's why people from Cuba and Mexico and Hatti risk their lives to go to a country where record profits are so high.

It's never been better to be rich in the US and it has never been better to be poor.
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Old 1st December 2012, 10:56 PM   #76
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Originally Posted by Jorghnassen
Quote:
He could tax cash reserves when they exceed a corporation’s foreseeable needs. That would make it more expensive to hoard money than put it to productive use.
Yes. If your profits are taxed at a relatively high rate then there is an incentive to plow that money back into the business. But if taxes are low (particularly if they are lower than income taxes) then you stand to gain more by just letting the capital accumulate.

Quote:
Regardless of their behaviour, he gave them tax cuts,
Tax cuts are an incentive, but for what? Not for adding jobs, R&D, expanding your market or lowering prices - all these things reduce profits in the short term. So you store the money up for... what? Future expansion? To cover uncertainty or survive the next downturn? Or do you look for some way to suck it out of the business and retire to the Bahamas?

The median age for a S&P 500 CEO is 55 years. You can bet many of them are seriously thinking about impending retirement, and how they can get out of the rat race early with as much cash as possible. Keeping corporate tax rates low encourages that behavior.

Originally Posted by Caper
Originally Posted by RandFan
But everyone didn't get richer
According to the chart you posted they did.
Technically you are correct, but a gain of 16% in 28 years is only 0.6% per year, hardly what most people would call 'getting richer'.
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Old 1st December 2012, 11:08 PM   #77
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Originally Posted by RandFan View Post
Waiting for the trickle down to start. Any day now that money has to start making it's way down to the rest of us. That is how it works right?
The trickle down is on its way. It's just warm, wet, yellow, and stinky.

Seriously though the whole concept of trickle down is about as sound as trying to fund a soup kitchen by overfeeding the rich and hoping they throw out enough edible garbage to make soup.
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Old 1st December 2012, 11:48 PM   #78
SezMe
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Originally Posted by Skeptical Greg View Post
You said you were waiting for the trickle down to start.

Why are you waiting for that to happen ?
Salary gains to track with productivity gains.
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Old 1st December 2012, 11:57 PM   #79
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Originally Posted by RandFan View Post
Originally Posted by RandFan View Post
Corporate profits are up. Stock market is up. Is there anyone out there that does not get why the "job creators" are so damn upset at Obama?
This one is trivial to rebut. "Compared to what ?".
In most recessions the DJIA forms a new high within 28 months. We are currently at nearly 62 months and the DJIA is ~7% below highs. In most post recession periods we enjoy some very substantial 'make up' GDP growth, however we can't currently sustain a 2% GDP growth rate here almost 5 years out. This "recovery" is dramatically different from others.

http://www.cbo.gov/publication/43707

The next point against this argument is that the DJIA represents very large biz, but the vast majority of job creation are from mid & small biz.. (which are currently stagnant at best). Pointing to Dow companies financials and arguing they should be creating many jobs, is just as wrongheaded as pointing to a healthy oak tree and complaining that it isn't producing pecans.




Originally Posted by RandFan View Post
What the sam hell is this supposed to mean? Did you really so easily drink the kool-aid? That was thoroughly debunked.

That link to cnn does nothing to debunk the "you didn't build that" issue, Particularly it is not an out of context quote as they claim.

Here is the full speech and quoted paragraph.
http://www.whitehouse.gov/the-press-...anoke-virginia
Quote:
If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business -- you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.
This is CLEARLY another speech in which Obama wishes to dilute the concept of personal responsibility and to remove some of the credit due to personal accomplishment, instead attributing it to others or society at large. Its not enough that my parents paid my educators, but if I accomplish anything the state has a stake in taking my work product to pay for more teachers. It's not enough that individuals and businesses both pay taxes to create roads then encourage commerce and trade - but now if I have a business I owe some additional tax to society.

It speaks to Obama's clearly pro-socialist "takes a village, so the village owns you" view of the world. His "Joe the plumber" comments were in a similar vein. Or this one "If you've been successful, you didn't get there on your own. You didn't get there on your own. I'm always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something -- there are a whole bunch of hardworking people out there". So to Obama, personal initiative and hard work and intelligent don't create success, instead (apparently) success is something you get from the state like government cheese.

This view of the world is directly at odds with any reading of history, or even a rudimentary understanding of human psychology. If does match a socialist and union viewpoint of people as merely interchangeable cogs in a machine - humans as commodity goods. It's educational to read Edmund Burke on this general point.


========


BTW your Adam Smith sig line ...
Quote:
It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
Is cherry picked and truly ignores context & meaning.

Smith (volume 2) is discussing ways to impose taxes, and how these impact the various source of income. Specifically he discusses the example of a rental tax of 20% of house rent, and then how this cost is effectively divided between the renter and landlord. He suggests that a wealthy renter would pay most of the tax, but an indigent renter (of a lesser property) would pay less of the tax and the landlord might "eat" more of the cost.

Quote:
The necessaries of life occasion the great expence of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expence of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be any thing very unreasonable. It is not very unreasonable that the rich should contribute to the public expence, not only in proportion to their revenue, but something more than in that proportion.

In modern parlance he is saying that there is little market pricing flexibility for the low-end housing, so if such a tax is imposed, the owner of such a property will not be able to command the old price + tax, and that this will depress the price of this low-end housing.

He is further arguing the specific that taxing renters of luxury housing of the rich more than renters of subsistence housing of the poor is "not unreasonable".

BTW Adams goes on to call income taxes "absurd and destructive", but this too lacks context.

Attempt to make the quote completely out of context, and then, apparently pretend that it has some relevance to the recent "eat the rich" populism merely demonstrates ignorance.
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Old 1st December 2012, 11:59 PM   #80
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Originally Posted by hodgy View Post
One thing this graph does clearly show is a correlation of earnings and risk - which is something that I would expect from a (fair) functioning capitalist system. The top x% gain disproportionately but they also lose disproportionately - your curves make that very clear. The lower curves are fairly flat and predictable (low risk), the higher curves are ever more extreme in variation (higher risk). Behind the scenes of these curves are people that have made and lost thousands / millions / billions, the fact that it doesn't smooth out tells a tale with respect to the pattern of risk as it moves up the reward chain.

Very good point.
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